Magadan Silver, a subsidiary of Polymetal, obtained a license for geological exploration at the Dukat prospective area in the Magadan Region. The license allows the Company to search for and estimate the field’s silver gold ore deposits.

The government granted the Company - the sole applicant - an exploration license for the Dukat prospective area valid until July 18th, 2011.

The licensed area of the Dukat prospective area is 2,420 square kilometers and it is located 600 km. to the north-east from Magadan around the Dukat deposit in the Omsukchan District in the Magadan Region. Dukat is an active silver and gold deposit developed and operated by Magadan Silver. It is the largest silver deposit in Russia and the 3rd largest in the world by production.

The mineral resources of the licensed area total 61 mln. ounces of silver (1,900 tons). Gold resources have not been estimated before.

The Dukat area was considered a promising area for silver and gold occurrences based on the results of exploration works from the 1960-80-s. The Company expects to find large mineable silver and gold deposits. The Dukat Exploration Company, a specialized exploration subsidiary of Polymetal, will conduct exploration works at the licensed area.

The Company believes that the area has not been sufficiently well-studied to date for ore silver and gold. Before the end of the year (2006), Polymetal plans to develop a detailed program for future, active geological surveying operations in the licensed area. The Company plans to use this area to create an additional reserve base for the active Dukat deposit’s plant. The majority of this exploration work will be carried out between 2007 and 2009. In 2010, the Company plans to have completed defining and estimating the Dukat area’s reserves.

Commenting on this announcement Vitaly Nesis, Polymetal CEO, said: “We believe that the results of the exploration program in this area will allow us to reimburse and expand precious metal reserves and feed the growing capacities of Stage I (producing) and Stage II (under construction) of the Dukat deposit’s plant with additional ore.